Old Point Financial Net Income Halves Amid Soaring Credit Losses

TL;DR

**Old Point Financial's earnings are getting crushed by credit losses and merger costs, making the TowneBank buyout a necessary lifeline.**

AI Summary

OLD POINT FINANCIAL CORP (OPOF) reported a significant decline in net income for the three and six months ended June 30, 2025, primarily due to increased provision for credit losses and merger-related costs. Net income for the three months ended June 30, 2025, was $1.242 million, a 50.9% decrease from $2.529 million in the same period of 2024. For the six months ended June 30, 2025, net income fell to $3.400 million, down 19.8% from $4.246 million in 2024. The provision for credit losses surged to $1.185 million for the six months ended June 30, 2025, compared to $341,000 in 2024, representing a 247.5% increase. Merger-related costs, totaling $1.237 million for the six-month period, also impacted profitability. Total assets decreased to $1.402 billion as of June 30, 2025, from $1.450 billion at December 31, 2024, a 3.3% reduction. Total deposits also declined by 3.7% to $1.208 billion from $1.254 billion over the same period. The company's proposed merger with TowneBank, approved by shareholders on April 2, 2025, is pending regulatory approvals and is a key strategic driver.

Why It Matters

This filing reveals a challenging period for Old Point Financial, with net income significantly impacted by higher credit loss provisions and merger-related expenses. For investors, the 50.9% drop in quarterly net income and the 19.8% decline year-to-date signal potential earnings pressure, even as the proposed merger with TowneBank offers a potential exit at $41.00 per share cash or 1.14 shares of TowneBank stock. Employees face uncertainty regarding roles post-merger, while customers may see changes in banking services and branch networks as the integration with TowneBank progresses. The broader market will watch how regional banks navigate rising credit risks and consolidation trends, with OPOF's performance reflecting sector-wide pressures.

Risk Assessment

Risk Level: high — The risk level is high due to the significant increase in provision for credit losses, which jumped 247.5% to $1.185 million for the six months ended June 30, 2025, compared to $341,000 in the prior year. Additionally, the company incurred $1.237 million in merger-related costs, further eroding profitability and indicating operational instability ahead of the TowneBank merger.

Analyst Insight

Investors should closely monitor the progress and regulatory approvals of the TowneBank merger, as the terms of $41.00 cash or 1.14 shares of TowneBank stock offer a clear valuation. Given the deteriorating financial performance, particularly the rising credit losses and merger expenses, holding OPOF stock outside of the merger arbitrage play carries elevated risk.

Financial Highlights

debt To Equity

10.87

revenue

$34,877,000

operating Margin

N/A

total Assets

$1,402,527,000

total Debt

$139,485,000

net Income

$3,400,000

eps

$0.24

gross Margin

N/A

cash Position

$100,678,000

revenue Growth

-1.7%

Revenue Breakdown

Key Numbers

• $1.242M — Net income for Q2 2025 (50.9% decrease from $2.529M in Q2 2024)
• $3.400M — Net income for H1 2025 (19.8% decrease from $4.246M in H1 2024)
• $1.185M — Provision for credit losses for H1 2025 (247.5% increase from $341K in H1 2024)
• $1.237M — Merger-related costs for H1 2025 (New expense impacting profitability)
• $1.402B — Total assets as of June 30, 2025 (3.3% decrease from $1.450B at Dec 31, 2024)
• $1.208B — Total deposits as of June 30, 2025 (3.7% decrease from $1.254B at Dec 31, 2024)
• $41.00 — Cash consideration per share in merger (Shareholder election option in TowneBank merger)
• 1.14 — Shares of TowneBank common stock per share (Shareholder election option in TowneBank merger)
• 5,102,197 — Common shares outstanding as of August 7, 2025 (Basis for per share calculations)
• $0.24 — Basic EPS for Q2 2025 (Down from $0.50 in Q2 2024)

Key Players & Entities

• OLD POINT FINANCIAL CORP (company) — registrant
• TowneBank (company) — merger partner
• The Old Point National Bank of Phoebus (company) — wholly-owned subsidiary
• Old Point Trust & Financial Services N.A. (company) — wholly-owned subsidiary
• NASDAQ (regulator) — stock exchange
• U.S. Securities and Exchange Commission (regulator) — filing oversight
• FASB (regulator) — accounting standards body
• June 30, 2025 (date) — quarterly period end
• December 31, 2024 (date) — previous fiscal year end
• April 2, 2025 (date) — Merger Agreement date

FAQ

Risk Factors

• Increased Provision for Credit Losses [high — financial]: The provision for credit losses surged by 247.5% to $1.185 million for the six months ended June 30, 2025, from $341,000 in the prior year. This significant increase indicates a deterioration in loan portfolio quality or a more conservative outlook on future credit conditions, directly impacting net income.
• Merger-Related Costs [medium — operational]: The company incurred $1.237 million in merger-related costs for the six months ended June 30, 2025. These costs, associated with the proposed merger with TowneBank, reduce current profitability and may continue to impact earnings during the integration phase.
• Declining Asset and Deposit Base [medium — market]: Total assets decreased by 3.3% to $1.402 billion as of June 30, 2025, from $1.450 billion at December 31, 2024. Similarly, total deposits declined by 3.7% to $1.208 billion. This contraction suggests potential challenges in attracting and retaining customers or a strategic shift in balance sheet management.
• Pending Regulatory Approvals for Merger [medium — regulatory]: The proposed merger with TowneBank, while approved by shareholders, is still pending regulatory approvals. Delays or failure to obtain these approvals could disrupt the company's strategic direction and create uncertainty.

Industry Context

Old Point Financial Corp operates in the regional banking sector, facing a competitive landscape characterized by consolidation and evolving customer expectations. The industry is sensitive to interest rate fluctuations, regulatory changes, and economic conditions, all of which can impact loan demand, deposit costs, and credit quality.

Regulatory Implications

The pending regulatory approvals for the TowneBank merger represent a significant hurdle. Any delays or adverse findings could impact the transaction's completion and OPOF's strategic trajectory. Compliance with banking regulations remains a constant operational requirement.

What Investors Should Do

1. Monitor merger progress and regulatory approvals.
2. Analyze the drivers of increased credit loss provisions.
3. Evaluate the impact of merger costs on ongoing operations.

Key Dates

• 2025-04-02: Shareholder approval for merger with TowneBank — Indicates shareholder support for the strategic combination, a key step towards completion, though regulatory approval is still pending.
• 2025-06-30: End of Q2 and H1 reporting period — Marks the period for which financial results, including decreased net income and increased credit loss provisions, are reported.

Glossary

Provision for credit losses

An expense set aside by a financial institution to cover potential losses from loans that may not be repaid. It reflects management's estimate of uncollectible loans. (A significant increase in this provision directly impacts profitability, as seen in OPOF's H1 2025 results.)

Merger-related costs

Expenses incurred by a company during the process of merging with or acquiring another company. These can include legal, accounting, and advisory fees. (These costs are a direct drag on OPOF's net income for the period.)

Core deposit intangible, net

An intangible asset representing the value of a bank's stable, low-cost deposit base, typically arising from acquisitions. (A decrease in this asset may indicate a reduction in the perceived value of the bank's core funding sources.)

Accumulated other comprehensive loss

A component of equity that includes unrealized gains and losses on certain investments and foreign currency translations that are not included in net income. (A reduction in this loss indicates an improvement in the value of these specific assets or liabilities.)

Year-Over-Year Comparison

Compared to the prior year, Old Point Financial Corp. has experienced a notable decline in profitability. Net income for the six months ended June 30, 2025, fell by 19.8% year-over-year, driven by a substantial 247.5% increase in the provision for credit losses and significant merger-related costs. Total assets and deposits have also contracted by 3.3% and 3.7%, respectively, indicating a potential shift in the company's scale and market position.

Key Financial Figures

• $5.00 — ange on which registered Common Stock, $5.00 par value per share OPOF The NASDAQ

Filing Documents

• ef20050385_10q.htm (10-Q) — 5425KB
• ef20050385_ex31-1.htm (EX-31.1) — 7KB
• ef20050385_ex31-2.htm (EX-31.2) — 6KB
• ef20050385_ex32-1.htm (EX-32.1) — 5KB
• 0001140361-25-031080.txt ( ) — 21511KB
• opof-20250630.xsd (EX-101.SCH) — 49KB
• opof-20250630_cal.xml (EX-101.CAL) — 108KB
• opof-20250630_def.xml (EX-101.DEF) — 364KB
• opof-20250630_lab.xml (EX-101.LAB) — 807KB
• opof-20250630_pre.xml (EX-101.PRE) — 543KB
• ef20050385_10q_htm.xml (XML) — 6035KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements 1 Consolidated Balance Sheets as of June 30, 2025 (unaudited) and December 31, 2024 1 Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2025 and 2024 2 Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 30, 2025 and 2024 3 Consolidated Statements of Changes in Stockholders' Equity (unaudited) for the three and six months ended June 30, 2025 and 2024 4 Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2025 and 2024 5

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 6 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 31 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 52 Item 4.

Controls and Procedures

Controls and Procedures 54

- OTHER INFORMATION

PART II - OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 54 Item 1A.

Risk Factors

Risk Factors 54 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 59 Item 3. Defaults Upon Senior Securities 59 Item 4. Mine Safety Disclosures 60 Item 5. Other Information 60 Item 6. Exhibits 61

Signatures

Signatures 62 Index GLOSSARY OF ACRONYMS AND DEFINED TERMS 2024 Form 10-K Annual Report on Form 10-K for the year ended December 31, 2024 ACL Allowance for Credit Losses ACLL Allowance for Credit Losses on Loans, a component of ACL ALCO Asset-Liability Committee ASC Accounting Standards Codification ASU Accounting Standards Update Bank The Old Point National Bank of Phoebus CECL Current Expected Credit Losses CET1 Common Equity Tier 1 Company Old Point Financial Corporation and its subsidiaries CBB Community Bankers Bank CBLR Community Bank Leverage Ratio Framework EGRRCPA Economic Growth, Regulatory Relief, and Consumer Protection Act EPS Earnings per share ESPP Employee Stock Purchase Plan Exchange Act Securities Exchange Act of 1934, as amended FASB Financial Accounting Standards Board FDIC Federal Deposit Insurance Corporation FHLB Federal Home Loan Bank FRB Federal Reserve Bank GAAP Generally Accepted Accounting Principles Incentive Stock Plan Old Point Financial Corporation 2016 Incentive Stock Plan IRLC Interest Rate Lock Commitments NIM Net Interest Margin Notes The Company's 3.50% fixed-to-floating rate subordinated notes due 2031 OAEM Other Assets Especially Mentioned OREO Other Real Estate Owned ROE Return on Average Equity SEC U.S. Securities and Exchange Commission SOFR Secured overnight financing rate Wealth Old Point Trust & Financial Services N.A. Index

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements. Old Point Financial Corporation and Subsidiaries Consolidated Balance Sheets June 30, December 31, (dollars in thousands, except per share amounts) 2025 2024 Assets (unaudited) Cash and due from banks $ 17,611 $ 17,098 Interest-bearing due from banks 81,846 122,238 Federal funds sold 1,221 708 Cash and cash equivalents 100,678 140,044 Securities available-for-sale, at fair value 214,377 218,083 Restricted securities, at cost 3,924 3,918 Loans, net 994,334 998,713 Premises and equipment, net 28,556 29,198 Premises and equipment, held for sale 344 344 Bank-owned life insurance 36,755 36,182 Goodwill 1,650 1,650 Core deposit intangible, net 121 143 Repossessed assets 2,354 1,972 Other assets 19,434 20,323 Total assets $ 1,402,527 $ 1,450,570 Liabilities & Stockholders ' Equity Deposits: Noninterest-bearing deposits $ 342,562 $ 355,041 Savings deposits 676,946 659,445 Time deposits 189,193 240,428 Total deposits 1,208,701 1,254,914 Federal funds purchased, overnight repurchase agreements and other short-term borrowings 3,321 3,967 Federal Home Loan Bank advances 40,050 40,000 Subordinated notes, net 26,114 29,799 Accrued expenses and other liabilities 6,205 7,920 Total liabilities 1,284,391 1,336,600 Stockholders ' equity: Common stock, $ 5 par value, 10,000,000 shares authorized; 5,102,797 and 5,078,318 shares outstanding (includes 70,854 and 65,920 of nonvested restricted stock, respectively) 25,160 25,062 Additional paid-in capital 17,672 17,548 Retained earnings 90,463 88,492 Accumulated other comprehensive loss, net ( 15,159 ) ( 17,132 ) Total stockholders ' equity 118,136 113,970 Total liabilities and stockholders ' equity $ 1,402,527 $ 1,450,570 See accompanying notes to consolidated financial statements. 1 Index Old Point Financial Corporation and Subsidiaries

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note 1. Description of Business and Summary of Significant Accounting Policies The Company Headquartered in Hampton, Virginia, Old Point Financial Corporation (NASDAQ: OPOF) (the Company) is a holding company that conducts substantially all of its operations through two wholly-owned subsidiaries, The Old Point National Bank of Phoebus (the Bank) and Old Point Trust & Financial Services, N.A. (Wealth) . The Bank serves individual and commercial customers, the majority of which are in the Hampton Roads region of Virginia. As of June 30, 2025, the Bank had 13 branch offices. The Bank offers a full range of deposit and loan products to its retail and commercial customers, including mortgage loan products offered through Old Point Mortgage. Wealth offers a full range of services for individuals and businesses. Products and services include retirement planning, estate planning, financial planning, estate and trust administration, retirement plan administration, tax services and investment management services. Principles of Consolidation The Consolidated Financial Statements include the accounts of the Company, and its wholly-owned subsidiaries, the Bank and Wealth . All significant intercompany balances and transactions have been eliminated in consolidation. Basis of Presentation The accompanying unaudited Consolidated Financial Statements of the Company and its subsidiaries have been prepared in accordance with U.S. GAAP for interim financial information. In the opinion of management, the accompanying unaudited Consolidated Financial Statements contain all adjustments and reclassifications of a normal and recurring nature considered necessary to present fairly the Company's financial position at June 30, 2025 and December 31, 2024, the statements of income, comprehensive income, and changes in stockholders' equity for the three and six months ended June 30, 2025 and 2024, and the statements of cash flows for

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